Date: Wed, 16 Jun 1999 06:55:00 EDT
From: ANTIFEDGOV@aol.com Add to Address Book
Subject: The Stock Market is a Fraud!
To: ANTIFEDGOV@aol.com
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The Stock Market is a Fraud
An Expose
by Ed Bruning
(ANTIFEDGOV@aol.com)
Every day you can hear the incessant cries of nearly everyone from financial
"experts" to "the man in the street": "Invest in the market, invest in the
market."
After all, we are told constantly, by investing in "the market" we are really
"investing in America," and "making the economy grow."
Unfortunately, those of you who have heeded these cries to "invest in the
market" have been duped by "the Street" hawkers.
If you paid money to buy a stock, either directly through a broker or
indirectly through a mutual fund or similar arrangement, there is a 95%
chance that you have not "invested" your money in anything.
Take, for instance, Microsoft stock. Let's say you wish to "invest" in the
power of Microsoft technology to the tune of 100 shares. You contact your
broker. He gives you the quoted price, you make the money available, and the
trade is completed. You now own "a piece of America."
Or do you? To whom did your "investment" money go? Microsoft? Not likely,
in fact 95% unlikely. Then where did your money go?
Your "investment" money, the money which you used to "keep the economy
growing," went only into the pocket of whomever owned the stock before you
did. It is as simple, and truthful, as that.
How is this transaction, your paying for Microsoft stock, "investing in
America?" It isn't. As far as you know, a Mexican citizen could have owned
the stock and sold it because he needed more cash to supply his maquiladora
plant on the Mexican border.
The stock market(s) is what is known as a "secondary" market. What this
means is that when you buy stock, rather than "making the economy grow" or
some other such falsehood, you are just putting money into the pocket of the
person who held the stock before you.
Therefore, unless you purchased your stock at an initial public offering
(IPO), or you purchased the stock directly from a company's own "Treasury
stock," your money will not have been "invested" in any company whatsoever.
Those of you who own stock through mutual funds or similar arrangement have
been double duped. Not only did you not invest your money in the company
whose stock you bought but you really do not even own the stock at all!
It is your mutual fund which really owns the stock, not you. You merely own
shares in the mutual fund which owns the stock! Thus you are twice removed
from "investing in America."
This vast difference between truly investing in a company, which you were
told you were doing, and merely paying off the prior stock owner, which is
what you actually did, is the centerpiece of the stock market Ponzi scheme.
You as a stockholder are legally entitled to no more than a claim to the net
assets (after all bondholders, taxes, and creditors are paid) of the company
whose stock you hold, in proportion to the number of shares you own. In the
case of the average "investor" this amount is next to nothing.
This state of things is no different than Mr. Ponzi's scheme. His
"investors" too actually were entitled to little, if anything, as a result of
their "investments."
As a Ponzi "investor" one was truly dependent upon Mr. Ponzi to find a new
"investor" to pay off his claim in an amount higher than what he paid for it.
Likewise, a stock market "investor" is truly dependent on his broker, or
mutual fund, to find a new "investor" to pay off his claim in an amount
higher than what he paid for it.
As far as the utilizing the stock market as a retirement vehicle is
concerned, the very idea that any significant number of "baby boomers" or
"generation X-ers," (or members of any previous or future generation for that
matter), can retire in comfort on a "well-invested" stock portfolio is the
height of absurdity.
What is the only way new retirees can obtain the money needed for their
living expenses from the value which their stock portfolios supposedly
represent?
To sell stock. And what is it that happens when a number of shares are
dumped on the market simultaneously? The price drops. And what is the
typical reaction of retirees, or near retirees, who hold stock which is
dropping? Sell more.
This built-in downward cycle, then, will quickly evaporate the value of
whatever "investments" a retiree might have. This is the stock market as
applied to retirement.
You have heard, of course, talk by certain public officials and financial
"experts" who say that a portion, if not all, of Social Security tax monies
should be "invested" in the stock market.
These individuals claim that we need to "save Social Security" or to "let the
individual have a stake in the market," which is why they talk up such a
proposal.
The secret is, though, that far from the stock market being needed to save
Social Security, IT IS SOCIAL SECURITY TAXES WHICH ARE NEEDED TO SAVE THE
STOCK MARKET.
Both Social Security and the stock market operate on the same type of Ponzi
scheme.
In Social Security, individuals and companies pay taxes, as general revenues,
into the U.S. Treasury. An amount equal to those taxes is then appropriated
by Congress into the different Social Security "trust funds." Then payments
from those trust funds are made to qualified "beneficiaries."
Thus, although we Americans are told by the U.S. government that we are
"making contributions to our retirement" through a Federal Insurance
"Contributions" Act (FICA), the tax and benefits with respect to Social
Security are entirely separate things.
When one pays what is known as a "Social Security tax" he is not
"contributing" into his "retirement fund." He is simply, in a roundabout way
as I described, paying for the retirement (or disability or hospitalization)
of someone else.
Also, it is possible, and perfectly lawful, for someone to collect Social
Security without ever having paid one dime in "Social Security taxes."
As can be seen, then, any person's claim to "benefits" under Social Security
rests solely on the the federal government's ability to tax someone else to
provide them.
The same is true, in a worse way, with the stock market. Those buying stock
do not "invest" any money in a company, they merely turn their money over to
the previous owner of the stock.
When it comes time for a stockholder to retire, or time for him to get some
ready money, he must depend on someone else to buy the stock from him as he
bought it from the owner before himself. He hopes, of course, that his
successor to the stock will pay him more than he paid his predecessor to the
stock.
This is no more than a variation of "the greater fool" theory, i.e. a fervent
hope that there will come along a greater fool than yourself upon whom you
can unload the stock.
If "Baby Boomers" are said to be soon overwhelming the Social Security system
because of their retirement simultaneously in great numbers, what will become
of the stock market when that generation retires?
To support the "boomers" in retirement, by paying off their claims to Social
Security, more laborers to pay more taxes must be found.
To support the "boomers" in retirement, by turning their stock portfolios
into needed cash, more "investors" must be found.
The truth is that Social Security, even though a fraud in itself, is actually
on a sounder footing than is the stock market!!
As the Social Security system is enforced by the federal government it can
be, and it has been, propped up through manipulation. There have been higher
payroll tax rates, raised retirement ages, extended "coverage" of employees,
taxation of benefits, higher amounts subject to payroll taxes, and other
schemes to keep Social Security afloat.
The stock market, however, is strictly voluntary. No one need "invest" if
they choose not to. The merging of these two frauds, the stock market and
the Social Security system, however, would mean that many of us would be
"required" to "invest in the market."
In this way, as far as the eye can see, both schemes working together can
better prop each other up than each can prop itself up.
The major players on Wall Street know full well that slick advertising
campaigns, cajoling, patriotic urgings, and appeals to greed will only go so
far to keep their "market" afloat.
Much more is needed because the stock market is a true Ponzi scheme with the
same inherent need: new investors are required to pay off the old investors
or the system collapses virtually overnight.
So, in light of all this, don't be "the greater fool." If you are "in the
market," get out; if you are not "in the market," stay out.
For if you own stock certificates you are....certifiable.
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